Concrete was poured over the weekend for the 47-story Texas Tower in downtown Houston. Copyright photo: Ralph Bivins, Realty News Report 2019
HOUSTON – (By Ralph Bivins, Realty News Report) – Over the weekend, scores of concrete trucks poured the foundation for Houston’s next skyscraper – Texas Tower, a 47-story Class AA tower developed by Hines.
The office building, already 33 percent leased, is scheduled to be complete by the end of 2021.
Hines is also developing a 46-story apartment tower across the street, making this part of downtown one of the most robust construction hot spots in the nation.
The Texas Tower construction site is also known as Block 58 – a block in northern downtown Houston bounded by Texas Avenue and Milam, Prairie and Travis streets. Crews worked for months excavating the block and making ready the structural steel for the great foundation. On Saturday (historical marker for Google historians: March 9, 2019) concrete trucks started rolling in for the great pour. They worked through the night and kept pouring Sunday.
The site was once the home of the Houston Chronicle for many decades until the wrecking ball took her down. A couple of years ago, the paper moved to the former Houston Post building on the Southwest Freeway at Loop 610. A Hines group bought the Block 58 site – with an additional half-block used as the Chronicle garage – in October 2015 for $54 million from Hearst Newspapers.
The new building’s foundation required 14,000 cubic yards of concrete, Hines reported. That’s enough concrete to lay a sidewalk from downtown Houston to Galveston Island, according to Realty News Report’s calculations.
Hines and the Canada-based Ivanhoé Cambridge are partners in Texas Tower, a 1 million SF building designed by Pelli Clarke Pelli. In San Francisco, Hines and Pelli recently teamed up to create the 61-story Salesforce Tower, one of the tallest buildings in California.
Chalk artist Carol West draws Hines’ new Texas Tower building at a mat pour celebration Saturday. Photo credit: Ralph Bivins, Realty News Report.
The Texas Tower foundation sits on the Block 58 on a diagonal angle, which should open up the view corridors. High-rise buildings surround much of the site. The new building rises across the street from the 75-story 600 Travis tower, which was built by Hines in the early 1980s, opening as Texas Commerce Tower and later named JP Morgan Chase Tower until the bank moved out recently. Also, the Rice Hotel is next door to the Texas Tower/former Chronicle site.
Catty-cornered, on the half-block site of the old Houston Chronicle garage, bounded by Preston, Milam and Prairie, Hines is building The Preston, a 46-story, 373-unit apartment building. Hines recently completed another high-rise apartment, called Aris, about a block away. One more significant move by Hines: the 1 million SF 609 Main at Texas building was completed a couple of years ago.
In summary, Hines is transforming the northern part of downtown Houston with four major high-rise projects in about four years.
Hines’ Texas Tower has significant pre-leasing. Vinson & Elkins, represented by Tim Relyea and his team at Cushman & Wakefield, inked a 16-year lease for 212,000 SF over the top seven floors. The Hines organization is relocating its own headquarters from Williams Tower next to the Galleria to the new building. Hines signed a 15-year lease for 155,000 SF covering five floors. Colvill Office Properties is handling the leasing for the Texas Tower.
A worker directs a concrete truck on Milam Street in downtown Houston as the foundation is poured for a 47-story office tower. Photo credit: Ralph Bivins, Realty News Report.
The pouring of the foundation comes as Houston office market is still pulling out of a slump that was caused by low oil prices and subsequent cutbacks in the energy industry.
Citywide office vacancy was 18.6 percent at year-end, CBRE reported. But if sublease space is included in the calculations, the availability rate is an uncomfortable 22.4 percent.
Office leasing activity picked up at the end of 2018. But there’s still about 8 million SF of sublease space on the market and great chunks of it will be reverting back to the landlord’s ledgers in 2019.
More office space is coming on the market. Skanska’s 35-story downtown tower will be completed in a few months.
The new buildings have no trouble attracting tenants and commanding high rental rates. Leasing professionals call it “the flight to quality.” The new buildings have the latest in technology and amenities, such as terraces and green space, good restaurants and food halls, floor-to-ceiling glass, and modern work space options. The new-building efficiencies allow tenants to downsize as they leave their old office towers for new ones. For example, Vinson & Elkins’ lease of 212,000 SF in the new Hines building represents a 37 percent decrease from the 338,920 SF the law firm now leases in First City Tower, according to Avison Young.
The new office buildings and widespread remodeling by other landlords increases the competition in downtown. As the “flight to quality” continues, CBRE, the largest commercial real estate brokerage in Houston, is going to tackle a “reclassification” of office properties in downtown in 2019, says Cody Armbrister, CBRE’s senior managing director in Houston. That means some buildings may slip from Class A to Class B.
Downtown’s office market is evolving. Nobody is worried that new buildings such as Texas Tower will have any trouble finding tenants. But the owners of older properties may be feeling some pressure in 2019.
March 11, 2019 Realty News Report Copyright 2019